I am not saying it is a huge factor, but part of the mix. Along with the coaches, the players, the facilities, the dorms, the weather, the rural campus, the championship history etc. We probably haven't lost a recruit that was on the fence just because of First Night, but I think it is possible that we could. We want to make a good impression on every aspect of the recruiting visit, including First Night, so if that is a weak link, why not fix it.
As for the specific gripes, I won't go back and rehash them in detail, but suffice to say the First Night threads for several years have included numerous posts regarding problems. Probably most on those threads thought there were significant problems with the production, but that it wasn't that big a deal. Others like me thought it was a more serious issue. Regardless, it has been part of the debate for several years.
As for the cause of this particular cancellation, as Husky Nan has posted it had to do with renovations. I hope we have future First Nights we can be proud of, think major changes are necessary for that to happen, and if no changes are made at least question whether it should be continued as is. Status quo should not be acceptable IMO for a class organization.